Q&A with Ed Lofgren, Chairman of the Marine Retailers Association of America

Ed Lofgren, 71, is chairman of the Marine Retailers Association of America and the primary owner and operator of 3A Marine Service, a Hingham, Mass.-based boat dealership.

Active in the Massachusetts Marine Trades Association, Lofgren is a longtime member of the board of directors, where he serves as education chairman. He also helped found the association's offshoot, the Massachusetts Marine Trades Educational Trust, which funds education and training programs and grants scholarships.

Lofgren serves on the South Coastal Workforce Board, the South Boston branch of a federally mandated program to provide training to unemployed workers and at-risk youth. He is the president of the MRAA Educational Trust and sits on the Marine Industry Training and Education Council. Lofgren also is a representative to the New England Marine Trades Association and a member of the board of directors of Save the Harbor/Save the Bay.

Lofgren is a staunch advocate for work force development and efforts to alleviate the shortage of skilled technicians in the recreational marine trades.

The industry veteran graduated from Northeastern University with a bachelor's degree in history and government and a master's in international relations. He has taught in the Massachusetts public school system, as well as on the university and college levels.

He has been married to Angela (Krest) Lofgren for nearly 50 years and has two daughters, Melanie Krause, who is a partner in the business, and Cynthia Martin, a high school teacher. He also has two grandchildren, Matt and Tom Martin.

Q. How long have you been in the marine industry and what got you involved with the Marine Retailers Association of America?

A. My marine industry days go back to the 1960s when I came out of the Army and needed to do something in addition to taking on a teaching position at a high school. I went into selling boats part-time. So that was the entry into the marine business.

I think my involvement with my local marine trade association spurred the idea [to get involved with the MRAA]. I was asked to serve on the board on the Massachusetts Marine Trades Association and did so for several years. Larry Russo was a member of that board as well, and he was already very involved with MRAA, and it piqued my interest to the point where eventually I became a member of the board of directors at MRAA, as well.

Q. As the new chairman of MRAA, what are your goals for the association?

A. Certainly survival of this industry has got to be the paramount goal for the MRAA. The dealer body in this country is hard-pressed by the financial hard times and particularly the lack of financing - retail and wholesale. If we are to survive as an industry and go forward, those problems have got to be remedied fairly quickly.

That's probably the No. 1 goal - to have the MRAA play a real role in trying to effect some good, solid financing for the industry.

We're already engaged in talking with government officials, as well as our other partners in the industry, the NMMA, for example. We have good communication with the manufacturers' association through [its president] Thom Dammrich, primarily, and the friendship that he has with Phil Keeter, our president. So we're in contact pretty much on a daily basis, and I think, through planning with the manufacturers and the dealers and the manufacturers acting together, we can come up with some solutions that will help ths industry.

Q. GE recently announced interest rate hikes and other changes to its contracts with dealers. How will this affect the industry and what type of fallout do you expect to see?

A. I think it will impact the industry very significantly. It's already launched a fallout. Dealers are scrambling to see if they can find alternative sources of funding, which pretty much don't exist. The lucky ones have relationships with their local piggy banks, and, in some instances, those local piggy banks are better equipped to handle financing on a local basis for these people. But there are not enough of those relationships, and if GE does eventually exit from this business, I can see a big fallout. I can see anywhere between a 25 and 50 percent fallout for the dealerships in this country if GE should pull out and there are no alternative sources of financing available.

I haven't seen too many [dealers shut down] in my area, and I haven't heard of many in other areas. There is some, but it's not a widespread phenomenon right now - but it well could be if we have no significant national source of funding, particularly for floorplanning.

I can't see the manufacturers sitting back and accepting that as well, because it surely affects their ability to sell product. So I think that we've got to come up with a solution. We don't know what that solution is at present time. We're just actively looking for solutions.

We've even appealed to the government on various levels. MRAA has a letter going out to every [member of] the Senate and the House, basically asking them to pay attention to our industry. It's a multibillion dollar industry across this country, and should we have widespread chaos and people exiting from the industry, it'll devastate in terms of taxes, jobs, manufacturers. Dealers will go out. We need to find a remedy, and we're actively searching for that remedy.

Q. With Textron and KeyBank already out of floorplan financing, do you see any other banks stepping up to fill in the gap?

A. I would have to say 'no' is the real answer to that. There have been some inquiries, there's been an effort to perhaps form national credit unions that would be marine-trade specific, but that hasn't gotten off the ground and would probably take some significant time to get off the ground, and I don't think we have that time.

I don't see anybody stepping in right away to fill this gap, but that doesn't preclude us from searching for someone to do just that.

Q. At least one manufacturer has announced it is moving back the 2010 model year to September to allow dealers to sell their older models. Is this a good move and will it help clear out older inventory?

A. We've been preaching for years that we should have some kind of a fall startup instead of starting to produce inventory early in the year. Anything that pushes us back to September or even a little bit later for the start of the model year would certainly help. Absolutely. I think it's a good move on the part of manufacturers to effect that right away if they can.

I can tell you that here in the Northeast we're having a great deal of consumer resistance to parting with dollars; there's no question about it. And as a result, I don't see any great amount of inventory moving out of the pipeline anytime soon.

What has to happen is that, on an individual and a regional basis, people have to come up with new ideas and do marketing schemes to try to move some inventory. One of the things that we're doing in my area, for example, is coming up with a regional boat show for the first time. A dozen dealers in the immediate area south of Boston are gathering together, and we've selected a marina, and we're going to hold a two-day boat show, with some attractive pricing and some attractive deals like discount slips. I think this is the type of thing people have to do to market anything that might sell in the next few months. It's going to take some doing, in other words.

Q. You mentioned discount slips being a part of marketing. We don't hear much about the issue of water access these days, but is it still a concern?

A. I would say there's a lot more slips available and moorings available than there used to be; there's no question about that. As far as water access goes, it's still a very burning question, even though it's been put partially on the back burner by the financing question.

For example, ocean management is now very much in vogue, where the government is sectioning off the ocean and saying you can do this and you can do that in certain sections of the ocean, but you can't do this. So water access is still a very burning issue, and we will pay some attention to it if we can get these survival questions answered first.

Q. Boat shows seem to be having mixed results this year, with many saying attendance is down, but the serious buyers are coming out. Are boat shows still lucrative and necessary for dealers? Do there need to be any changes to the formats of these shows?

A. Boat shows are absolutely necessary for a forum to exhibit and to sell - absolutely. You have to have good, well-organized, well-promoted boat shows. They're not a thing of the past, as some dealers and manufacturers have seemed to indicate. They are very much a viable part of our industry and will continue to be.

I think local or regional shows are an option, and that needs to be looked at on an individual regional basis. I think we had a good base for that on the South Shore of Boston that may not exist in other areas. Some areas are not as contiguous; it differs from area to area. Here in Boston, I don't think we could ever give up our two major shows, which bring everybody in the New England region together. I think they're pretty darn important - one in the winter to gear up for the spring sell and one in the fall to introduce the new models and to hopefully get some sales prior to the winter.

I can tell you that sales do happen [at these shows]. Sales are off, there's no question about that, but there are sales and some of them are significant. When you move a lot of little product or a few pieces of big product, it can be very, very helpful in the scheme of things over a year, and that's what boat shows do for you. They present a forum for setting up those sales or for making those sales.

Q. What do you think the dealer side of the industry will look like when we come out of the recession?

A. No question in my mind that it's going to be somewhat reduced. The big question that remains is by what percentile. If you want me to make a guess, my guess would be we could have a significant outfall of about 25 percent. But that's only if we're able to solve this financing issue. That's the burning issue. If we're able to solve that financing question, then I think we'll get away with as little as a 25 percent fallout.

Beyond that, if we don't solve the financing question, it's disaster; it's chaos. Potentially, it is the significant end of the industry as we know it if we don't solve this question.

I think most dealers have done close scrutiny of most of their expenses. I've heard tales of furloughs, layoffs, cutbacks to four- and three-day weeks. There's no question that dealers have examined the expense side of the ledger very carefully. Yes, this will bring changes to the industry. I think when we come out of this we'll have fewer manufacturers as well, and some people say that's a good thing. I've never stopped to evaluate that, but it seems to me we don't need hundreds; we could probably do with significantly fewer manufacturers than we have.

If we have good survival among dealerships, I think you'll see that the dealerships that remain are stronger as a result, too. All of these efforts, like scrutinizing the expense side of the ledger, are going to help these dealerships to become stronger.

There's a need for dealers to band together under the MRAA flag. There's strength in numbers. We can help you survive.